Financial Accounting (FA) Test No 2:
Consists of thirteen (13) questions to test your understanding of the basic accounting concepts:
[Refer Answer to FA Answer No 1 &2]
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Item No |
Name the Concept |
QUESTIONS |
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(1) |
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The success of the company is mainly attributed to the invaluable qualities of three employees, X,Y & Z. However, employees X,Y & Z are not recorded as an assets in the balance sheet of the company.
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(2) |
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The company has received goods valued at $200,000 and have already billed the customers for all these goods but so far has only received suppliers invoices for $50,000. The balance of $150,000 is taken up into the books of account. What concept is this?
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(3) |
? |
A large company purchases a $150 chair and expenses it immediately instead of recording it as an asset and depreciating it over its useful life. This practice may be acceptable because of which principle/guideline?
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(4) |
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For the December year-end close, the utilities bills have not been received for the month of November & December. However, based on previous average month trends, take up $20,000 X 2 = $40,000 as utilities expenses as estimates for November & December. |
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(5) |
? |
The management has decided on a twelve month financial reporting period. They have just started on the 1st January so they will complete the twelve months reporting period by 31st December. |
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(6) |
? |
During the audit, auditors have discovered that certain portion of the company sales are not true sales as they have evidence that the sales are financed by the company itself. |
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(7) |
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In the Notes to the financial statements, Management disclosed that an earthquake has destroyed one of their factory in Thailand, hence stopping production and affecting the revenue of the company. |
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(8) |
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Once a particular financial period is adopted by a business, it is not changed from one period to the next period |
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(9) |
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The cost of a dust bin in an office is treated as an expense rather depreciating its cost over its useful life |
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(10) |
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Expenses are recognize in the same accounting period as the revenues which result from the incurrence of these expenses |
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(11) |
? |
The ringgit which is used to measure business transactions in Malaysia is assumed to maintain its purchasing power over time. |
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(12) |
? |
Each transaction is described by a business document that proves the transaction did occur. |
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(13) |
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The actual amount paid or received is the amount recorded in the books of accounts. |